Ways of Avoiding Common Business Tax Errors
Filing of tax returns is essentialread more here for your business as it keeps you in check with the authorities. You do not want the authorities to be chasing you because you have not done your due diligence.
It is thus important that as a licensed business, make sure that you file the returns without any underpayment for peaceful business operations.
Any business tax mistake that might occur when filing your tax returns should be rectified as quickly as possible. You can for instance file your returns late and there are consequences to that.
As a business owner, you should be careful when making tax payments to avoid possible business tax mistakes. Illustrated below are tips to help you avoid possible business tax mistakes.
The first thing you should do is check the deadline for filing the returns. As a business person, it is hard to always find time to check certain matters about your business because of your tight schedule.
That is why just as you have a day for paying your employees, you should also include in your records the day for filing your returns to avoid late payment of taxes.
A business is normally penalized for late filing of returns which is an unnecessary expense. Your secretary can help you keep these records to avoid the late filing of returns.
Misclassification of employees is a mistake that every business should avoid. In a business, if you hire a contractor to do a job for you, make sure you clarify whether they are independent or permanent employees in your organization.
Also, whether it is a contractor or an employee, depends on how much control you have over them.
An employer always has control over their employees so make sure that you classify your employees and independent contractors separately. You should also make sure their salaries are classified separately when filing tax returns.
You should also classify your business and personal expenses separately. Any person that fails to separate their personal expenses from the business expenses is likely to pay a penalty fee to the tax authorities.
Many people are fond of paying for all their expenses using the same credit card as it seems easier that way. Mixing of the business and personal expense is likely to attract a penalty on your business.
It is necessary, therefore, to have a separate business bank account with its own business records.
It would be best if you open separate accounts to make it easy for you when filing tax returns. But in case you are using the same account, make sure you have the records right.
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